‘Satisfying’ summer start for Transat A.T.

One of the best in company’s entire history, CEO says

MONTREAL— Tour package operator Transat A.T. says it experienced one of the best starts to a summer season in its history, but third-quarter net earnings eventually dropped 37 per cent due to the impact of higher market capacity to Europe.

The Quebec-based company, which operates Air Transat, earned $25.8 million, or 66 cents per diluted share, for the three months ended July 31. That compared to $1.07 per share a year earlier, when net profit was $41.1 million.

Transat said it was negatively affected by a 10-per-cent increase in overall market capacity on the transatlantic market, and fuel and currency hedging accounting during 2013.

“In the entire history of the company, we’ve done better on only two occasions, including last year, which was a record. So we’re talking about a very satisfying start to the season,” stated president and CEO JeanMarc Eustache.

Adjusted net income before nonoperating items was $26.7 million, or 69 cents per diluted share, compared with $30.8 million or 80 cents in the third quarter of 2013.

Analysts expected Transat would earn 67 cents per share in adjusted profits on $966 million of revenues.

Revenues were up 1.6 per cent at $941.7 million, compared with $927 million a year earlier.

The number of travellers was stable during the quarter, while average selling prices were higher on a lower Canadian dollar compared to the euro and British pound.

North American revenues decreased 4 per cent, or $27.9 million, as the number of travellers decreased 2.8 per cent. The segment’s operating income was $19.8 million, compared to $28.1 million a year ago. The company reduced its transatlantic capacity by 2.1 per cent during the quarter and increased its supply to sun destinations by 8 per cent.

The company said it expects to record “satisfactory” but lower results during the fourth quarter as transatlantic capacity from August to October is similar to last summer.